Massachusetts’ High Court Invalidates Proposal To Cut Income Tax Rate Due to ‘Misleading’ Summary Produced by AG

Massachusetts’ highest court, the Supreme Judicial Court, invalidated a ballot initiative that would have cut the income tax, after the justices ruled that the state’s attorney general produced a “misleading” summary of the proposal.The ballot measure would have lowered Massachusetts’ 5 percent flat tax to 4 percent by 2029. Opponents of the initiative said it would have lowered the long-term capital gains tax rate, which is tied to the income rate. The text of the initiative has no reference to capital gains rates. However, the summary produced by Massachusetts Attorney General Andrea Campbell said that the initiative would lower the tax rates for “personal taxable income other than interest, dividends or capital gains income, such as wages and salaries.”On Thursday, the Supreme Judicial Court blocked the initiative from appearing on the ballot due to Ms. Campbell’s summary. “The summary misstates the petition’s impact,” the ruling states.The justice noted that the long-term capital gains tax rate is tied to the personal income tax rate, and said, “The summary’s contrary statement is not a minor imprecision. It is significantly misleading and likely to influence voters.”An organization that backed the initiative, the Massachusetts Opportunity Alliance, MOA, criticized the ruling. A spokesman for the MOA, Colin Reed, said, “Today’s unprecedented ruling prevents Massachusetts voters from weighing in on a popular proposal to address the state’s cost-of-living crisis.”Mr. Reed said the MOA will “continue to advance practical solutions” to make the state “more affordable and competitive.”A group opposed to the initiative, the Protect Massachusetts’ Future ballot committee, a coalition of unions and advocacy organizations, celebrated the ruling. The president of the Massachusetts AFL-CIO, Chrissy Lynch, said in a statement that Massachusetts voters are “better off with this question off the ballot.”“Today’s decision has made clear that billionaires cannot buy themselves sneaky tax breaks with their misleading and irresponsible ballot question,” Ms. Lynch said. Critics noted that Massachusetts law provides a tax deduction for charitable donations only when the income tax is at 5 percent, and raised concerns that it would lead to less giving. The MOA sought to tamp down those concerns as it pointed out that, according to data from the IRS, just 9 percent of Massachusetts residents received a federal charitable deduction benefit in 2022. The group argued that lowering the tax rate would give residents more money to make charitable donations and that the legislature could change the law to keep the deduction in place.The MOA also sought to downplay opponents’ complaints about the impact on the long-term capital gains rate, saying that the tax cut would “help the majority of taxpayers.” A poll released by Suffolk University and the Boston Globe on Tuesday found that nearly half of Massachusetts residents said they had thought about leaving the state. Forty percent of respondents said the cost of living was the top reason for thinking about moving, while 18 percent listed taxes. The poll also found that roughly 65 percent of respondents said they would support the tax cut initiative, while 20 percent opposed it, and nearly 14 percent were undecided. However, a May survey from the MassINC Polling Group, which was sponsored by groups opposed to the initiative, found that the language appears to have a significant impact on support for the initiative. In that survey, 66 percent of voters said they would support the initiative after reading the summary. When they were told it would lower the long-term capital gains and reduce funding for the state’s budget and impact the charitable giving deduction, support for the measure dropped to 40 percent.

Massachusetts’ High Court Invalidates Proposal To Cut Income Tax Rate Due to ‘Misleading’ Summary Produced by AG

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